Think About That For A Minute

DirecTV and EchoStar are raising rates again. This, in itself, should not come as any surprise to folks in the cable industry. After all, both DBS operators are faced with the same reality that we are of constantly rising costs, especially for programming and on-the-ground services. Oh, wait a minute – the satellite guys don’t really offer on-the-ground services. They don’t really have a local presence. There are no "DirecTV installers" or "EchoStar local service technicians." If DBS subscribers want that kind of service they have to pay extra. Remember, the $6.00 per month extra "service protection plan" that DirecTV offers? Well, let’s forget that for the moment and just focus on some other numbers. The latest reported DirecTV rate increase proposal averages out, according to analysts, at around 5 percent. Interesting number. If you look at The Wall Street Journal’s report on DBS prices, you’ll see that the average monthly payment in 1997 was around $44.25. In 2003, it’s $62.18. Rough math (and with me, I assure you it’s very rough) says that comes out to around, you guessed it – 5 percent per year. And remember, for almost all of that time DBS subscribers had to buy their own boxes and antennas, and, as I noted above, the price does not include local service, free box replacement, and all the other things that people expect and automatically get with their cable service. In other words, when you actually look at the numbers, cable compares very well with our major competitor. Unfortunately, we have seen no front-page headlines in The Washington Post, The New York Times or USA Today about the DBS rate increases. But to be somewhat fair, we are not seeing them much about cable, either, these days. That’s in part because cable operators have stopped the practice that was fostered by old FCC rules of making their rate adjustments at the same time. It’s also because maybe, just maybe, our critics are finally recognizing that our legitimate costs are, indeed, going up and our infrastructure, indeed, costs lots of money. Other headlines and articles tend to prove that "figures don’t lie." Take a look at some of them: The Baltimore Orioles are paying their new shortstop $72 million; NBC Sports will pay Notre Dame about $9 million per year for home-game broadcast rights; Seattle Mariners outfielder Ichiro Suzuki just got a 4-year, $44 million dollar contract; Alex Rodriguez – Texas Rangers – 7 years, $179 million. And folks are wondering why entertainment costs are rising? Of course it’s not just cable and DBS, either. Movie ticket prices in 2003 rose an average of 4 percent, and you don’t want to even think about how much you are paying for buttered popcorn (or parking) – all costs that have to be included in an outing to the movies. I’m not going to get into the whole "captured audience" thing being forced to watch ads before the movie – that drives me crazy! What about our broadcasters? The analysis of what the consumer costs really are is more difficult, but you can bet when companies start paying $2.3 million for a 30-second ad on the Super Bowl this weekend that money is eventually going to come from somewhere – and I bet we know where! By the way, the broadcasters have added more than 36% more ads in the last decade, too. "Free TV?" Figures don’t lie. We’re on solid, competitive ground.